STRATEGIC BUSINESS PLAN
Contingency Planning The forecast is based on the prevailing economic outlook as of March 2023. As with all projections, substantial uncertainties exist that could affect the City’s financial condition including the economy, state mandates, agreements with employee associations, and changes to the City’s fee structure. Historically, periods of economic expansion are followed by economic contraction, or recession. Since the Great Depression, recessions have occurred every seven years on average. The consensus opinion
among economists is for continued subdued growth. The economic expansion that began ten years ago has been a less robust pace than prior recoveries. If, however the economy should suffer a recession in the next several years, the City has a number of tools to mitigate these impacts. The City was successful in the 2008 to 2011 period in managing the impacts of one of the worst recessions in modern history. Strategies used included re-evaluating service delivery options, delaying non-critical vacancies, eliminating non-critical vacant positions, postponing merit increases and cost of living adjustments, deferring contingency capital improvement projects, and deploying contingency reserves. The City was also successful in managing the financial impacts from the COVID-19 pandemic, where contingency reserve funds were used to balance out the FY 2020-21 deficit in-order to maintain essential services. It is important to note that in any given fiscal year the level of resources, expenditures and year-end balances are the result of countless variables, including the global, national and state economies; legislative mandates; tax policy; the State’s financial and budget circumstances; changing land use or building patterns; and City Council priorities. To the extent these factors vary from the five- year outlook’s assumptions, outcomes will also vary. The five-year outlook has been prepared using recent experience, trends and the assumptions discussed throughout the section. However, as part of the effort to anticipate economic conditions with the potential impact to Irvine’s fiscal health, the City evaluates scenario assumptions. Scenario planning is a powerful tool in establishment of strategic direction and priorities and provide perspective on potential events and their consequences, providing a decision-making context for policy makers and managers. Scenarios focus on the interrelated effect of multiple factors and provide a range of possible future outcomes allowing for informed decisions and a strategy based on deeper insight. It is important to remember that this analysis is not a prediction and are assumptions in the event of possible fiscal issues.
FY 2023-25 Adopted Budget
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